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  "notes": "Includes a survey chart (Exhibit 6) regarding project scrutiny and contextual text on market volatility.",
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      "text": "87 percent of survey participants state that they're coming under greater scrutiny regarding the economics of large capital projects.",
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      "text": "Exhibit 6: Which statement best reflects your perspective of the economics of large capital projects and the scrutiny surrounding their actual measured benefits and return on capital post project completion?",
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      "text": "Scrutiny on capital projects: 87%",
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      "text": "In response, 83 percent of survey participants say their single biggest priority is improving the estimating accuracy of materials and equipment, which accounts for a significant proportion of project costs (see Exhibit 7). Achieving better contractual protection—which is about transferring risk—is another key imperative for both owners and contractors. However, such an approach can damage owner/contractor relationships at a time when the two parties should work together more closely to enable owners to better manage their own risks. With both owners and contractors attempting to transfer risk, there is likely to be an impasse, although continued tightness in the market should favor contractors, who are in high demand.",
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      "text": "Volatility has fueled market challenges, but so have the continued stagnant productivity and lack of innovation in E&C. Much of this is due to a highly fragmented structure where many players have neither the size nor the incentive to invest in new technology or methodologies, especially when contractors take on paper-thin margins that leave little room for error. Between 1997 and 2021, construction productivity actually fell by 7 percent, whereas in the manufacturing sector it rose by 126 percent.",
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      "text": "Consequently, owners are seeing increased interest in the economics of large capital projects, with 87 percent stating that they're coming under greater scrutiny (see Exhibit 6). Indeed, 28 percent of project owners say they're facing \"greatly increased\" focus and scrutiny.",
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      "text": "According to U.S. Bureau of Labor Statistics in March 2023, construction costs rose 17.3 percent year-on-year. Add to this the war in Ukraine, the West potentially de-coupling its economy from China, resource constraints, and ongoing supply chain disruption, and it's evident that E&C firms and project owners face continuous volatility.",
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      "text": "Inadequate risk management has hardly helped, with insufficient linkage between project risk management and enterprise risk management that prevents owners and contractors from accurately aggregating all their risks to fully understand their corporate risk profile. With a multitude of players, a dearth of data sharing and interoperability, and a siloed value chain, visibility across individual and multiple projects is often lacking. Project managers are often unable to identify and address poor performing projects, sites, or individuals.",
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      "text": "2 US Bureau of Labor Statistics, New Manufacturing and Industrial Building Construction PPI, March 2023",
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